Connected Retail, AR/VR and More: How 5G Connectivity Could Shake Up Retail
Thought leaders - especially telecom executives - wax poetic about the potential of 5G to “revolutionize” retail through connected in-store experiences like augmented reality and smart shelving systems.
While mobile carriers are investing major dollars in fiber networks to enable 5G connection, coverage today is nowhere near mainstream. During a recent panel at CEWeek 2019 moderated by CNET reporter Maggie Reardon, experts in retail, consumer electronics and wireless technology debated 5G’s use cases, feasibility and outlook for retail.
What is 5G, anyway?
In theory, 5G enables data transfer speeds of up to 10GB per second, outpacing current 4G LTE technology by over a hundred times (for comparison, 4G is about 8MB per second). By making it easier and faster for businesses to access cloud technology, use the internet and develop consumer services, 5G is a hotly anticipated innovation enabler.
Its main draw is what industry insiders call “low latency,” meaning the ability to process a high volume of data with minimal delay. Hypothetically, this keeps prices down by offloading phone memory to the cloud, but the technology is still so incipient that mobile carriers haven’t set retail prices just yet.
Panelists Maggie, CNET; Nick Cherukuri, ThirdEye Gen, Inc.; Michele Dupré, Verizon; Tim Bajarin, Creative Strategies; Robb Stott, editorial director of Dealerscope
“The promise of 5G is such a high level of speed and low latency that the actual shopping experience can be very different,” said Nick Cherukuri, founder of ThirdEye Gen, an augmented reality and mixed reality software development company.
How will 5G impact the retail experience?
Retailers like to vaunt their forays into augmented and virtual reality, but current 4G connectivity isn’t fast enough to scale these capabilities to all mobile users.
What’s more, the strength of private and even commercial broadband connections still depends largely on your location; rural areas lacking fiber optic networks lag behind. Many AR experiments are still considered proof-of-concept, but standardising 5G will undoubtedly accelerate the mainstreaming of connected retail.
Above all, in-store AR adds a visual context to the purchasing experience. A customer can hover their smartphone over a product and see product information such as ingredients, ratings and instructions projected onto their screen.
“Two things that will be significant: one, while in the store looking at a [product], you can see it in action and learn about how it works,” said Rob Stott, editor-in-chief at Dealerscope. “When you get home, if you have Wifi or 5G, you can watch step-by-step instructions on how to assemble it.”
Interest in 5G is prevalent not just among retailers but consumer packaged goods brands. Many are experimenting with direct-to-consumer distribution and outreach as customers veer away from department stores and other traditional legacy retailers. Currently top of mind for CPGs is using gamification to promote their brand in retail stores.
“I think there’s an opportunity to bridge what CPGs want to do in terms of brand promotion with the retailer and create this cohesive environment - whether it’s through a game, video or AR,” said Michele Dupré, group vice president at Verizon.
What are some retail uses cases for 5G?
The Amazon Go! retail store where customers put items into a virtual basket and simply walk out is still a novelty, but with 5G, these cashless, payless retail experiences could become standardized.
Recognizing the importance of experiential marketing and in-person customer engagement, retailers are gravitating towards pop-up stores as an inexpensive, scalable way of penetrating a wide market while drawing attention to a specific service offering or product line. 5G plays an instrumental role in designing engaging pop-up experiences with digital signage, augmented reality, try-before-you-buy installations and more.
Perhaps the most obvious and crucial application of 5G is the autonomous vehicle, whose self-driving capabilities rely almost entirely on an unrelenting Wifi connection - ideally within the framework of smart city infrastructure where street signs and traffic signals are IoT-enabled to communicate with the vehicle.
In a life-or-death context such as driving, 5G connectivity is a requisite, meaning coverage would need to be sufficiently widespread before autonomous vehicles can scale.
“If you’re going 60 mph down the highway you want to make sure the automatic braking system works when it needs to,” said Stott. “So having 5G and the promise of incredibly fast reaction times and lower latency will enable those systems to not only improve but create use cases we haven’t even thought of yet.”
In addition to consumer-facing innovations, 5G can strengthen back-office automations as well, such as video-enabled inventory control, smart shelving that sends alerts when stocks run low, or RFID tracking on high-value merchandise for theft prevention.
So what’s preventing 5G from becoming mainstream?
For one thing, 4G quality itself isn’t up to par. “Even the stores themselves will tell you that their Wifi connections aren’t consistent enough to deliver [connected retail],”said Tim Bajarin, president of Creative Strategies. “They need a ubiquitous connection to make this work.”
According to Dupré, Verizon was the first to roll out 5G for private homes in Houston, Los Angeles and Sacramento. The company has invested $1 billion in fiber deployment to expand 5G coverage to 20 additional cities including Little Rock, Arkansas; Des Moines, Iowa; Cleveland and Columbus, Ohio.
Given the uncertainty around pricing, it’s difficult to gauge initial uptake. If the initial rollout is expensive, uptake will be limited to early adopters.
“That’s not a bad thing,” said Cherukuri. “Early adopters will accept some of the failures during that period, but ultimately it’s got to be priced in a way that’s acceptable across the board.”
Given the potential of 5G to usher in a new era of consumer-facing applications where in-store shoppers use connected devices to browse content, security and consumer data protection are major concerns.
All the panelists agreed that the responsibility of security should be shared between the carrier, the device manufacturer and the retailer, but it’s unlikely to manifest as a checks-and-balances system. Instead, each party will be tasked with educating the consumer and clearly communicating how their data will be used.
“It falls on everyone involved in the process,” said Stott. “I think it just boils down to transparency with the customer, letting them know whether it’s in the store or online how you’re going to use their information and what they’re getting into.”